Net Neutrality Expected to Be Another Casualty of Trump Era

(Bloomberg) -- The Obama administration’s signature policy on technology was net neutrality. Rules passed by the Federal Communications Commission in 2015 prohibited internet service providers from treating web traffic differently depending on the service being used.

To Obama's FCC, the rules were a way to prevent broadband providers from inappropriately knee-capping companies like Netflix whose services competed with their own. Opponents saw a regulatory power grab. The rules are likely to face a serious challenge almost immediately once Donald Trump is sworn in. As a result, the web, especially streaming video services, could be headed down a very different path.

As with many issues, trying to glean the intentions of the incoming administration requires translating a few off-hand comments into a plan for public policy. Trump hasn’t spent a lot of time talking about net neutrality. But his baseline hostility to government regulation and a two-year-old tweet calling the FCC’s rules an “attack on the internet” have stoked expectations that net neutrality will be on the chopping block in early 2017. In a sense, it doesn’t matter how much Trump personally cares about this issue. Other Republicans do, and having control of Congress and the White House frees them up to enact a philosophy they held before the election.

Undoing net neutrality through the FCC itself would be a slow and onerous task. The agency would have to go through another rule-making process, which would involve months or years of public hearings and comment periods. This could be complicated further by a federal court decision that upheld the current set of regulations. Supporters of the current rules would almost certainly challenge any changes in court. A more likely course for the incoming FCC chair, say advocates from both sides of the debate, is to simply pretend the current rules don't exist.

This would be welcome news for cable companies, which roundly opposed net neutrality. Companies like Comcast, AT&T, and Verizon have become increasingly aggressive in building (and buying) their own video services to make up for their flagging subscription television lines of business. Verizon has built a web video service, Go90, and AT&T recently announced the creation of DirectTV Now, a low-cost Internet video service intended to undercut cable subscriptions.

AT&T already doesn't count its own services against data caps for its wireless subscribers. In effect, this makes rival services more expensive, and this week the FCC told AT&T that the practice may violate net neutrality rules.

With such enforcement off the table, companies that provide wireless and broadband service could push streaming video services like Netflix or YouTube to pay to keep on an equal footing. Over the last several years, Netflix has argued strenuously about the harm this kind of market could do to customers, and the current rules rode a wave of popular support for limiting the power of the cable companies.

Republicans in Congress will almost certainly push legislation to reverse course by removing the FCC’s authority to regulate the internet. The commission could be given some more limited power to police overtly anti-competitive behavior like slowing down specific websites, or that power could be moved to the Federal Trade Commission. Bills to this effect have been floated in the last several years but were essentially symbolic during the Obama years.

“With the risk of a veto now gone, a legislative remedy now not only looks possible, but likely,” Craig Moffett of MoffetNathanson Research wrote in a note published Thursday.

If all Congress wants to do is take away the FCC’s power to regulate the internet through the Telecommunications Act of 1996, it could do so quietly with a three-page bill. Emboldened Republicans could also launch a wider re-write of the 20-year-old law.

“There’s something to say from a political perspective about pushing through big, sweeping pieces of legislation quickly,” said Berin Szoka, president of TechFreedom, an organization that opposed the FCC’s rules. “It’s not like we haven’t spent 20 years thinking about this.”

Opening up a wider debate on telecommunications policy would become a major political battle touching on areas like media consolidation and online privacy. The politics would be tricky, and it’s not clear that Trump would want to spend energy on such a heavy lift. A Telecommunications Act rewrite would be an odd choice for a populist administration, given the seemingly permanent popular mistrust of the cable industry. Trump himself came out against AT&T's proposed acquisition of Time Warner, saying the big media companies already had too much power.

Pro net neutrality advocates will try to tap into the popular support for Obama's rules. As it considered how to approach net neutrality in recent years, the FCC received millions of public comments supporting tougher rules, even as Silicon Valley giants like Facebook and Google largely kept their heads down. The commission ended up implementing a plan that had longtime supporters of net neutrality pinching themselves to make sure they were actually awake. Democrats rejected an attempted compromise bill floated last year by Senator John Thune, a Republican from South Dakota. Whatever course they take will be a test of the power of grassroots support for the original rules.

“The tools we have are noise and protest. Frankly, that’s how we got net neutrality in the first place,” said Craig Aaron, chief executive officer of pro-net neutrality group Free Press. “That certainly should be part of the calculus for anyone who wants to mess with the internet.”